{"id":76074,"date":"2023-04-10T05:00:45","date_gmt":"2023-04-10T12:00:45","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76074"},"modified":"2023-04-07T13:06:18","modified_gmt":"2023-04-07T20:06:18","slug":"demand-down-second-homes-march-2023","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/demand-down-second-homes-march-2023\/","title":{"rendered":"Demand For Vacation Homes Is Down More Than 50% From Pre-Pandemic Levels"},"content":{"rendered":"

The number of people locking in mortgages for second homes dropped to its lowest level since 2016 in February and remained nearly as low in March. Prospective second-home buyers are deterred by high costs, a slowing short-term rental market and the declining prevalence of remote work.<\/span><\/i><\/p>\n

Mortgage-rate locks for second homes were down 52% from pre-pandemic levels on a seasonally adjusted basis in March, compared with a 13% decline for primary homes. Second-home rate locks fell to their lowest level since 2016 in February and remained nearly as low in March.<\/span><\/p>\n

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That\u2019s according to a Redfin analysis of <\/span>Optimal Blue<\/span><\/a> data. A mortgage-rate lock is an agreement between a homebuyer and a lender that allows the homebuyer to lock in an interest rate on a mortgage for a certain period of time, offering protection against future interest-rate hikes. Homebuyers must specify whether they are applying to secure a mortgage rate for a primary home, a second home or an investment property. This analysis does not include cash purchases. We define \u201cpre-pandemic levels\u201d as January and February of 2020. We used early 2020 as a comparison point because it provides a baseline for mortgage demand before homebuyer activity fluctuated wildly during the pandemic.<\/span><\/p>\n

Second-home demand is also down from a year ago and from January 2022, just before mortgage rates started rising from record lows. Mortgage-rate locks for second homes were down 49% year over year in March and down 71% from January 2022. Mortgage-rate locks for primary homes have dropped 29% year over year and 35% since January 2022.<\/span><\/p>\n

The drop in second-home demand follows a meteoric rise during the pandemic homebuying boom. Mortgage-rate locks for second homes reached a peak of 89% above pre-pandemic levels in August 2020. At that time, many affluent Americans bought homes in vacation destinations, encouraged by low mortgage rates, remote work, and limitations on traveling from place to place.\u00a0<\/span><\/p>\n

Second-home buyers are deterred by high rates, newly instituted loan fees, slowing rental market<\/b><\/h3>\n

A scarcity of new listings, elevated mortgage rates, still-high home prices and persistent inflation, among other economic woes, are holding back demand for both primary and second homes.\u00a0<\/span><\/p>\n

A variety of factors are causing the outsized<\/span> drop in second-home<\/span> demand:<\/span><\/p>\n